Student Loan Advice For 2 Year College Students In A Poor Economy

By Bryce Q. Jarwoski

Banking institutions are reducing the number of colleges they provide student loans to and most of those cut are community colleges. It seems as though those attending the expensive, elite colleges will continue to have access to student loans. It would appear that college education is being split by the lack of availability of student loans to some students.

The real reason behind the decision by leading banks to stop offering student loans is the current financial crisis. It is simply much harder for lending institutions to raise the money themselves, so they do not have the funds to lend and they have had to cut back.

The good news for community college students is that other companies are still lending money to finance college education. These include Sallie Mae and Nelnet, both of whom recently committed to providing federal government backed loans to all students, regardless of the college they attend.

For students looking to fund their college education by taking out a loan, the best option is a federal loan. These loans have a low, fixed interest rate, low fees and the interest is paid by the government while you are studying. These loans are available to all students regardless of their college, their background or credit history.

So why, therefore, are community college students unable to get a federal government backed loan? It appears that numerous community colleges do not participate in the scheme and so the students at these colleges cannot get a federal student loan. The students have to rely on expensive private loans and credit cards to pay for their college education - and they are usually the students who are least able to afford this.

Lending institutions will claim that students attending community colleges present a greater risk of defaulting on the loan, and can probably prove this. Instead of forcing these students into greater debt by not allowing them a cheap federal student loan, the colleges need to educate the students on responsible borrowing. This would make the scheme more attractive to lenders.

About the Author:

Over at Student Loan Guru, we answer Student Loan questions from actual College Students around the Country. Whatever your question, chances are we can answer it. For example, one of the most popular questions we hear is: "Will a student loan affect my chances of getting a mortgage". You'll find these and other answers at our site.